Friday, 31 March 2017

Yesterday’s White
Paper for the forthcoming Great Repeal Bill outlines the key elements of
the domestic law aspects of the process of the UK leaving the EU. It indicates
broadly how the future proposal for a Bill will do two main things: (a) convert
existing EU law applied in the UK to UK law including, in some cases, law of the
devolved bodies in Scotland, Wales and Northern Ireland); and (b) provide for a
process of amending ex-EU law in future.

While the White Paper has thought
some issues through in detail, there are some key points on which it is either
vague or unconvincing (or both). In particular, it contains no real detail or
substantiated argument on the most important issue: the power of the executive
to amend laws without an Act of Parliament.

Converting EU law

The White Paper confirms that the
UK will continue to apply EU law until Brexit Day – which will be March 29,
2019, unless (a) the EU/UK withdrawal agreement specifies otherwise, or (b) the
EU and UK agree to extend this date, or (c) the UK rescinds its notification to
withdraw from the EU (if that is legally possible). It also confirms the
intention to remove the European
Communities Act – the main Act of Parliament that gives effect to EU
membership in UK law – as of that date.

But it seeks to retain in force
the EU rules which apply in the UK as of that date, subject to amendments (as
discussed below). The EU rules in
question are directly-applicable Regulations and EU Treaty provisions, as well
as Directives which were already transposed into UK law by using the European Communities Act. Also, the
Treaties will remain relevant for the interpretation of ex-EU legislation which
was initially based on them (para 2.10).

What about the EU courts? Here the White Paper draws a
distinction. On the one hand, post-Brexit laws will not be subject to the
jurisdiction of the EU Court, and the UK’s courts will not be obliged to take
ECJ rulings into account (presumably they could choose to do so, however). On the other hand, ex-EU laws will still
have to be interpreted by reference to pre-Brexit case law of the EU courts, to
ensure certainty. There’s no reference to post-Brexit case law, but again presumably
the UK courts could choose to consider it.

The latter rule will not be
absolute, however: pre-Brexit ECJ case law will have the same binding effect as
UK Supreme Court judgments, and so the Supreme Court could overrule those
judgments in the same limited circumstances in which it can (and rarely does)
overrule itself. It will of course be possible for Parliament to overturn ECJ
case law by amending the legislation, and the government hints that it might
want to consider clarifying the circumstances in which the Supreme Court could
overturn prior ECJ rulings.

A similar distinction arises as
regards the supremacy of EU law: the
EU court rule that EU law takes precedence over any conflicting national law,
so the latter has to be disapplied by national courts in the event of any
conflict. The supremacy rule will not apply to post-Brexit UK legislation, but
it will still apply to pre-Brexit UK laws
that conflict with ex-EU law.

Despite the general conversion of
EU law, the White Paper insists on an exception for the EU Charter of Rights. In
that case, the ex-EU legislation will be interpreted after Brexit by the ‘rights
underlying’ the Charter (ie the ECHR and other international treaties which the
UK has signed), rather than the Charter itself.

Amending ex-EU law

Obviously the body of ‘ex-EU’ law
will not remain unchanged forever. The White Paper discusses the process by which
it can be changed in future. There are two key issues here. First, will any changes
be the responsibility of the Westminster Parliament or government, or the
parliaments and executives of the devolved bodies in Scotland, Wales and
Northern Ireland? Secondly, within Westminster, what changes will be subject to
Acts of Parliament, and what will be subject to delegated powers conferred upon
the executive?

On the first point, the White
Paper is vague about exactly what powers will be exercised by the devolved
administrations, and this is likely to be a highly contested issue in
practice.

On the second point, the
distinction between Acts of Parliament and executive powers is important
because an Act of Parliament allows for extensive public discussion and
parliamentary scrutiny, whereas an act of the executive (usually in the form of
'Statutory Instruments') is subject to limited public or parliamentary
involvement. For instance, there is far less time for discussion, and no
prospect of tabling amendments.

The White Paper starts by
mentioning some possible delegated powers for the Great Repeal Bill that will surely
be uncontroversial. For instance, it refers to the references in ex-EU law to
'EU law', powers of the EU institutions, or information sharing with the EU. Since
most of these references will be redundant (except possibly as regards continued
sharing of police information, as the White Paper notes), there are limited
policy choices to be made when replacing them. So there can be little
objection in principle to the executive using such powers.

However, there is a further
category of changes to EU law which will be more substantive. The White Paper
gives a non-exhaustive list of cases where the government thinks it should have
delegated powers: where a policy might change in light of the Brexit talks with
the EU; where a policy changes as a direct consequence of leaving the EU; and
where the level of detail is 'not appropriate' for an Act of Parliament.

More generally, the government
argues that these powers must be widely defined and must apply not only to
ex-EU law converted into EU law, but also Acts of Parliament linked to EU
membership. The power for the executive to amend Acts of Parliament is
controversial, and such clauses are widely known as 'Henry VIII clauses'.
Although the House of Lords Constitution Committee had previously
argued that there should be extra powers of parliamentary scrutiny in this
context, the government implicitly rejects this view.

Comments

The overall objective of ensuring
legal continuity by retaining pre-Brexit EU law in force is logical, and the
White Paper has thought many of the details through. It makes sense to ensure
that legal continuity as much as possible by creating a distinct body of ex-EU
law, where a form of the principle of supremacy still applies and ECJ judgments
remain binding, subject to the rare case that the UK Supreme Court might want
to overturn.

However, some of the detail has
not been considered: what about future ECJ case law? What about cases concerning
EU law in the UK pending in the UK courts or the EU courts on Brexit Day? What
if a condition of ensuring market access to the EU after Brexit is to take relevant
EU court case law ‘into account’? (Note that this falls short of making those
judgments binding, and is even an
even longer way from retaining the supremacy
of EU law over national law). What about the domestic legal impact of any
alternative court or dispute settlement system that might rule on UK/EU
disputes after Brexit?

The hostility to the EU Charter
forms an exception to the rule that prior EU law continues to apply, and raises
much legal uncertainty. Does it also mean that ECJ rulings referring to the
Charter should be ignored, at least to the extent that they refer to the
Charter? Since many such rulings refer to other EU laws and interpret them in
light of the Charter, there will in effect be an odd requirement to keep following
part of a ruling but not all of it. But this will be like trying to remove an
egg from an omelette, because the judicial reasoning on the Charter and the EU
legislation is intertwined.

To some extent, this effect will
be limited by the requirement to interpret the ex-EU law in light of the ‘underlying
rights’ instead of the Charter. But what does this mean in light of the
government’s intention to repeal the Human
Rights Act, and replace it with a British Bill of Rights? What if the ECJ’s
interpretation of the Charter was arguably more ambitious in a particular case
than the relevant ‘underlying rights’ in the Charter? What if the relevant ‘underlying
rights’ are set out in a human rights treaty which the UK has not ratified, or
not made part of its domestic law? And there is no mention of the pre-Charter
case law of the ECJ on human rights as ‘general principles of law’; what
happens then?

Moving on to the amendment
process, the White Paper’s initial examples of very technical changes to ex-EU
laws that the government might wish to make are frankly misleading. For the
White Paper then goes on to refer to a non-exhaustive list of broad
discretionary powers which the government wants to make changes to the statute
book in light of talks with the EU, to make consequential changes to policies
or to fill in details of laws.

As drafted, these powers are
potentially nearly limitless. They could, for instance, be used to adopt every
detail of future policies on agriculture, fisheries, trade with non-EU
countries or extradition to the EU without full parliamentary scrutiny or
public discussion, because each of these are areas where the new laws could be
regarded as changes consequential to leaving the EU.

So how should Parliament limit
government powers? It will be hard to avoid conferring some substantive delegated powers on the government, as the time
frame to implement a Brexit agreement with the EU (or the absence of one)
before the likely Brexit Day of March 29, 2019 might be tight. On the other hand, there might be several months to
spare, or there might be a transitional agreement keeping EU law in force for
some time, so giving Parliament more time to act.

The best way forward is to rule
certain issues off-limits entirely, particularly issues where EU law provides
for essentially domestic legal harmonisation: for instance employment law, environmental
law, consumer law, discrimination law. In those areas there is generally no
reason why the law necessarily has to change if the UK leaves the EU, because
the relevant laws are not usually about cross-border matters. (There are
exceptions, like European Works Councils or carbon trading laws).

In other substantive areas, where
there is a direct link with leaving the EU, Parliament should be given a right
to rule on whether the conditions for conferring delegated powers on the
government are met. Effectively it could decide whether the trigger for those
powers had to be pulled due to lack of time or not. (Thanks to Professor Tammy Hervey
for a version of this idea). There could be particular limits on the power of
the executive to amend Acts of Parliament.

Also, the government could be
pressed to make more effort to table Acts of Parliament well in advance of
Brexit Day on the planned changes to some key areas, for instance agriculture
and fisheries, to enable full parliamentary scrutiny. In particular, the
planned customs bill could include rules setting out the domestic legal
framework for UK’s post-Brexit international trade law (more on that specific
issue another time).

Finally, on the issue of devolved
assemblies, it is striking that the Brexit Minister’s foreword to the White
Paper talks generally about a “significant increase in the decision-making
power” of the devolved bodies, but the actual White Paper then does not give
any detail of this. On the other hand it does
go into some detail about the powers which can’t
be conferred upon devolved assemblies, due to an intention to ensure a UK-wide
single market.

Maybe we need a short, simple phrase
to refer to the promise of devolved powers which is not then substantiated by
any detail. Might I suggest…“the Vow”.

Wednesday, 29 March 2017

Stian Øby Johansen, PhD fellow at the
University of Oslo Faculty of Law*

Yesterday
the Court of Justice of the European Union (the CJEU) delivered its judgment
in the long-awaitedRosneftcase (C-72/15, ECLI:EU:C:2017:236).
The judgment clarifies some aspects of the CJEU's jurisdiction over the Common
Foreign and Security Policy (CFSP). Moreover, it is an important precedent in
the field of EU sanctions law generally, and also resolve some questions of
interpretation that are particular to the Russian sanctions.

In this blog post I
will focus on what the judgment in Rosneft adds
to the existing case-law on the review of CFSP decisions. Thus, I will not be
discussing any of the more specific questions of EU sanctions law nor summarize
the full 197 paragraph judgment. For those looking for a quick summary of the
case, I refer to the succinct post by
Maya Lester QC at the Sanctions Law blog.

Recall that EU law sanctions (also
known as "restrictive measures") are enacted through a two-step
process. First, the Council adopts a decision under TEU Title
V, Chapter 2. This decision is then implemented in Union law (and thus
domestically in the EU member states) by virtue of a regulation adopted
under TFEU article 215. In the case of the Russia sanctions, as in
most sanctions regimes, the wording of the respective decisions and regulations
are virtually identical.

The use of two legal instruments
with different legal bases -- one decision with a CFSP legal basis, and one
regulation with a legal basis in the TFEU -- complicates matters when it comes
to the jurisdiction of the CJEU. With regard to the regulation, the judgment
in Rosneft confirms the
obvious: any regulation adopted on the basis of the TFEU article 215 is within
the jurisdiction of the CJEU (Rosneft paras
105-106). That is so irrespective of whether the regulation merely restates the
decision.

On the other hand, the decision is
a act adopted under the CFSP. The CFSP treaty provisions and acts adopted under
them are carved out of the CJEU's otherwise general jurisdiction over Union law
(see TEU article 24 and TFEU article 275). To this carve-out there are two
exceptions, a.k.a claw-backs: the CJEU has jurisdiction to monitor
compliance with TEU article 40 and to decide on the legality of decisions
concerning "restrictive measures against natural or legal persons"
(emphasis added). As I will come back to, both claw-backs were at play in Rosneft.

The remainder of this blog post
focuses on the CJEU's jurisdiction over such CFSP decisions, notably on the
clarifications and contributions the Rosneft judgment
offers to the ever-expanding case law in this field. (Key judgments in the
previous years that have discussed these issues include Case C-155/14 P H v. Council et al [2016], Case
C‑439/13 P Elitaliana SpA v. EULEX Kosovo [2015],
and Opinion 2/13 EU Accession to
the ECHR [2014].)

The general scope of the CJEU's jurisdiction over CFSP decisions

With regard to the general scope
of the CJEU's jurisdiction over CFSP decisions, the Rosneft judgment further cements the approach that has emerged in
the case-law over the last couple of years.

First, the limitations on the
CJEU's jurisdiction and the two claw-backs explicitly provided for in TEU
article 24(1) and TFEU article 275(2) have to be taken seriously. In
relation to CFSP acts, the CJEU only has jurisdiction to (1) monitor compliance
with TEU article 40, and (2) decide on the legality of restrictive measures
against natural or legal persons. (Rosneft para
60.)

Second, while recognizing the
explicit limitations on its jurisdiction in the treaties, the CJEU reiterates
that those limitations must be interpreted narrowly (Rosneft para 74-75). Or, put differently, the provisions
clawing back jurisdiction must be interpreted expansively.

What is new in Rosneft is the application of these
starting points to a new issue: do the claw-backs apply in the context of
preliminary rulings? This question must be answered separately for the each
claw-back provision (Rosneft para
61).

Preliminary rulings and the legality of CFSP decisions in light of TEU
article 40

One of the easier questions before
the CJEU in Rosneft was whether the
validity of CFSP decisions in light of TEU Article 40 could be determined in a
preliminary ruling. The identical claw-back provisions in TEU Article 24(1) and
TFEU Article 275(2) simply provide that the CJEU has jurisdiction to
"monitor compliance with Article 40 [TEU]".

There is nothing to suggest that
such monitoring may only happen e.g in actions for
annulment. In other fields of EU law, it has long been clear that the CJEU
has jurisdiction to declare Union acts invalid in preliminary rulings (see e.g.
Case 314/85 Foto-Frost [1987]).
Thus, due to the lack of an express and specific limitation, the CJEU
concluded that its jurisdiction extended also to monitoring compliance of
CFSP decisions with TEU article 40 in preliminary rulings (Rosneft paras 62-63).

The key jurisdictional question
that the Grand Chamber had to deal with in Rosneft was whether it had
jurisdiction to decide on the validity of a CFSP targeted sanctions decision in
a preliminary ruling procedure. Due to the CFSP carve-out and the peculiar wording
of the claw-back provision for restrictive measures in TEU article 24(1) and
TFEU article 275(2), there has been significant uncertainty as to the correct
answer to this question.

The relevant part of TEU article
24(1) reads as follows (emphasis added):

"The [CJEU] shall not have
jurisdiction [over the CFSP], with the exception of its jurisdiction [...] to
review the legality of certain decisions as provided for by the second
paragraph of Article 275 of the [TFEU]".

The relevant part of TFEU article
275(2) reads as follows (emphasis added):

"the Court shall have
jurisdiction [...] to rule on proceedings, brought in accordance with the
conditions laid down in the fourth paragraph of Article 263 of this Treaty,
reviewing the legality of decisions providing for restrictive measures against
natural or legal persons [adopted under the CFSP]"

In other words: TEU article 24(1)
limits the jurisdiction to "certain decisions as provided for" by
TFEU article 275(2), which in turn refers to "proceedings" that are
"brought in accordance with the conditions laid down" in TFEU article
263(4). The latter provision provides that actions for annulment can be
brought against acts of the EU institutions before the CJEU:

"Any natural or legal person
may [...] institute proceedings against an act addressed to that person or
which is of direct and individual concern to them and does not entail
implementing measures."

The combined text of these
provisions arguably suggests that the jurisdiction to determine the validity of
CFSP targeted sanctions decisions only extends to actions for annulment brought
by individuals. TFEU Article 263(4) ostensibly provides for the institution of proceedings for
annulment; the types of acts that may be annulled are
listed in TFEU Article 263(1)-(2). Conversely, then, the CJEU would lack
jurisdiction to determine the validity of such a decision in a preliminary
ruling. Against this, one may argue that jurisdiction to rule on the validity
of Union acts is inherent to the complete system of legal remedies that the
Union treaties establish.

How to solve this conundrum? AG
Wathelet essentially suggested that the Court should interpret TFEU article
275(2) in the context of TEU article 24(1). In particular, he emphasized the
use of the term "certain decisions" in TEU article 24(1), which
suggest that the reference in TFEU article 275(2) to TFEU
article 263(4) concerns the type of act (“restrictive measures”), and not
the type of proceedings (i.e. actions for annulment). See AG Wathelet in Rosneft,
para 61 et seq. Consequently, the validity of CFSP decisions can
be determined in any kind of proceedings -- also in preliminary rulings.

A further point is that the
French language version of TFEU article 275(2) differs from the English in a
crucial respect. It provides that the CJEU has jurisdiction "pour
controller
la légalité de certaines decisions visées à l’article 275,
second alinéa [TFUE]". This seems to suggest an interpretation
in line with that of AG Wathelet. Although AG Wathelet does not discuss
the language discrepancy directly, French is the "langue de
travail" at the CJEU, and one may speculate that AG Wathelet relied more
heavily on the French version of the treaty text than the English.

In Rosneft the CJEU reaches the same conclusion as AG Wathelet;
the CJEU has jurisdiction to determine the validity of CFSP decisions in
preliminary rulings. In doing so, the CJEU recognizes the
textual discrepancy between the otherwise identical claw-back provisions
in TFEU article 275(2) and TEU article 24(1), but not (explicitly) the
linguistic discrepancy However, it is slightly more careful than AG
Wathelet in grounding its argument in other sources than (con)text -- perhaps
because the Court is indeed aware of the discrepancy between the
language versions.

There are in particular two
supporting arguments that the CJEU relies on. First, it puts forward a systemic
argument. According to the CJEU, it is "inherent" in the Union's
"complete system of legal remedies or procedures that persons bringing
proceedings must, when an action is brought before a national court or
tribunal, have the right to challenge the legality of provisions contained in
European Union acts" (Rosneft paras
67-68).

Second, the CJEU emphasizes
the fundamental rights dimension of judicial protection (Rosneft paras 69-75).
As usual in cases on jurisdiction on CFSP acts, it refers in passing to the
concept of the "rule of law" (Rosneft para
72). But it also refers extensively to article 47 of the Charter of Fundamental
Rights (Rosneft paras 73-74).
While the Charter has been mentioned in passing before in cases concerning CFSP
decisions (notably in Case C-455/14 P H
v. Council et al. [2016]), the emphasis has usually been on
the nebulous concept of the rule of law. In Rosneft we see the reverse: an emphasis on the fundamental
right of effective judicial protection, which is laid down in positive primary
law in CFR article 47.

The conclusion that the CJEU
draws is thus built on a principled and even more solid ground than that of AG
Wathelet. The question of whether the validity of CFSP decisions can be
determined in preliminary ruling proceedings must therefore be regarded as
settled following the Rosneft judgment.

Can the Court of Justice of
European Union (‘the Court’) assert jurisdiction and provide a national court
with an interpretation of Union law in a case referred to it from a national
court under an Article 267 TFEU preliminary reference, when the subject matter
is in regard to the Common Foreign and Security Policy (CFSP)? This was one of
a number of questions referred to the Court of Justice from the High Court of
England and Wales in Rosneft (C-72/15).
This week, the Court meeting in a Grand Chamber formation, answered this
jurisdictional question in the affirmative. Given the significance of this
judgment for the law of the Common Foreign and Security Policy (CFSP), and previous
discussion of the Opinion of the Advocate General in 2016, yesterday’s
judgment was hotly anticipated given its implications for the ‘specific rules
and procedures’ that are applicable to the law of CFSP. As the Court continues
in a line of case law to clarify its jurisdiction in CFSP, it is ultimately a
question of constitutional importance for the Union’s external relations.

Rosneft concerns the EU’s restrictive measure regime, more
popularly known as sanctions. The governance scheme surrounding sanctions is a
developed body of case law, in which individuals subject to them have the
possibility to challenge them directly before the EU’s General Court, the
administrative court of the Union. Given that the locus standi (standing)
of taking actions to the Court is a narrow right, the use of preliminary
references, otherwise known as referrals from national courts, also functions
as an indirect means for legal entities to access the Court for adjudication on
matters of Union law. What makes the Rosneft case noteworthy, in
comparison to other aspects of CFSP and sanctions case law, is that it is the
first case on the Court’s jurisdiction to rule on sanctions not taken directly
to the EU General Court. Rather, the Rosneft case
arrived at the Court of Justice through the preliminary reference procedure
from a national court, in this case, the High Court of Justice (England and
Wales) in the United Kingdom, upon the basis of Article 267 TFEU.

Sanctions have a peculiarity in
their procedural sense. Firstly, it requires a CFSP Decision, done on an
Article 29 TEU legal basis. Secondly, a subsequent Regulation is decided upon
an Article 215 TFEU legal basis, which allows sanctions to be implemented
throughout the Union. Accordingly, in Rosneft, on the table was Council Decision 2014/512/CFSP, Council
Decision 2014/659/CFSP, and Council Decision 2014/872/CFSP (collectively, ‘the
Decision’). Furthermore, there was Regulation 833/2014, Regulation 960/2014,
and Regulation 129/2014 (collectively, ‘the Regulation’). The Decision taken by
the Council, where Member States as a general rule act unanimously, were
directly in response to the alleged actions of Russia in Ukraine.
Substantively, the applicant contested the implementation measures by way of
Regulation taken by the British Government as a result of the CFSP Decision, of
which it too was part of, on the grounds that it contained ambiguities. Accordingly,
the substantive question was whether the CFSP Decision was one the one hand
sufficiently clear, or on the other, imprecise?

In Rosneft, both the Decision and accompanying Regulation were
challenged. Yet, it is unclear whether the Court has the jurisdiction to fully
answer the questions asked of it, given the first legal act is adopted on a
CFSP legal basis (the Decision), and the second legal act on a non-CFSP
legal basis (the Regulation). The Court’s jurisdiction in the latter is
undisputed given its adoption on Article 215 TFEU, however, much more
speculative and up for question is the Court’s jurisdiction on the Decision,
given its adoption on a CFSP legal basis. Prior to recent treaty revision,
questions surrounding the Court’s jurisdiction rumbled for decades. However,
the Treaty of Lisbon, saw a flipping effect, in that jurisdiction of the Court
was to be assumed, unless specifically derogated from by the Treaties. One of
these derogations was acts adopted upon a CFSP legal basis, which is elaborated
in Article 24(1) TEU and Article 275 TFEU.

Firstly, Article 24(1) TEU, inter
alia, states that, ‘The Court of Justice of the European Union shall not have
jurisdiction with respect to these provisions [CFSP], with the exception
of its jurisdiction to monitor compliance with Article 40 of this Treaty and to
review the legality of certain decisions as provided for by the second
paragraph of Article 275 of the Treaty on the Functioning of the European Union.’
Secondly, Article 275 TFEU states that the Court has the jurisdiction to, ‘...rule
on proceedings, brought in accordance with the conditions laid down in the
fourth paragraph of Article 263 of this Treaty, reviewing the legality of
decisions providing for restrictive measures against natural or legal persons
adopted by the Council on the basis of Chapter 2 of Title V of the Treaty on
European Union.’

This consequently points to
Article 263 TFEU and its fourth paragraph stating, ‘Any natural or legal person
may, under the conditions laid down in the first and second paragraphs,
institute proceedings against an act addressed to that person or which is of
direct and individual concern to them, and against a regulatory act which is of
direct concern to them and does not entail implementing measures.’ The first
and second paragraphs in Article 263 TFEU do not appear to envisage the
possibility for the Court to have the ability to answer questions on
preliminary references from national courts. The leading academic material of
EU procedural law previously acknowledged that the Court ‘may afford
possibilities’ in this area (Lenaerts et al. 2014:458), recognising that it is
by no means a settled question. This is, until the right opportunity arose to
address it, which was Rosneft.

So what did the Advocate-General
say firstly? AG Wathelet said the Court did have the jurisdiction to answer the
substantive questions of it by the national court. Yet how did he reach this
view in light of the treaties, and their apparent formulation to exclude the
Court in such matters? Whilst acknowledging the Court’s jurisdiction in CFSP
matters appears to be limited by Article 24(1) TEU and Article 275 TFEU ‘at
first sight’ (para. 39), he skirted a narrow interpretation of Article 263 TFEU
and its apparent lack of foresight for seeing preliminary references in the
equation. For the aforementioned Article 24(1) TEU and Article 275 TFEU, it can
be assumed there was there a need for them to have the intended same effect.
However, they are worded differently, and thus, the Advocate-General said,
might put out the ‘false impression’, that the Court had no jurisdiction. Thus,
he said, the two articles enable the Court ‘to review the compliance with
Article 40 TEU of all CFSP acts’, (para. 65), regardless of what way
the question ends up at the Court, that is, through a direct action, or a
preliminary reference.

The Opinion of the
Advocate-General is a demonstrative example of how the restatement of certain
constitutional provisions within primary law have the ability to be read
differently, despite the intentions of the drafters may have been for such
restatements to have the same meaning. Given this part of the Opinion of the
Advocate-General on jurisdiction, which was non-binding, what did the Court
say, and did it reach the same conclusion?

Judgment

In the judgment issued on 28
March 2017, the Grand Chamber, before going onto matters of substance, had to
handle the important question of jurisdiction, and furthermore grapple with the
admissibility of the question of jurisdiction. The Council had queried
whether the questions referred by the national court could have been answered
in respected of the Regulation alone (non-CFSP), rather than contesting the
validity of Decision (CFSP) (para. 48). Thus, along this line of thinking, the
Court would then not have to assert any jurisdiction on the CFSP legal basis,
for which the Council has always viciously defended against any judicial
incursion by the Court (Cases C-455/14 P, H v. Council; C-439/13 P Eulex
Kosovo; C-263/13 Tanzania; Opinion 2/13; and C-658/11, Mauritius). The Court rejected this Council viewpoint,
stating that it is up to national courts alone to ask questions of the Court on
the interpretation of Union law (para. 49). The Court was therefore only in a
position to not answer a reference when it fails to have a legal question in
need of answering, or is only a hypothetical question (para. 50).

The Court furthermore in its
judgment stated that only focusing on reviewing the legality of the Regulation
(non-CFSP), and not the questions asked of it as a whole by the national court,
which would not be adequately answering questions asked of it (para. 53).
Moreover, despite the sharp distinction between a CFSP act and a non-CFSP
act, in order to impose a sanction within the EU legal order, the Court noted
that they are inextricably tied. Given how sanctions are imposed in the EU
legal order, it is a perfect demonstration of the possibility of close-knit
relations between CFSP and non-CFSP legal bases, given the Court in Kadi I said the link occurs when it
has been made ‘explicitly’ (Joined Cases C-402/05 P and C-415/05 P, para. 202).
The Court in Rosneft however
hypothesized that even if the latter Regulation implementing a CFSP Decision
was to be declared invalid, that would still mean that a Member State was to
conform to a CFSP Decision. Thus, in order to invalidate a Regulation following
a CFSP Decision, the Court would have to have jurisdiction to examine that CFSP
Decision (para. 56).

Once the admissibility of
the question of jurisdiction was answered, the Court progressed onto answering
the jurisdictional questions raised, in which it concluded that, ‘Articles 19,
24 and 40 TEU, Article 275 TFEU, and Article 47 of the Charter of Fundamental
Rights of the European Union must be interpreted as meaning that the Court of
Justice of the European Union has jurisdiction to give preliminary rulings,
under Article 267 TFEU, on the validity of an act adopted on the basis of
provisions relating to the Common Foreign and Security Policy (CFSP)...’
(Ruling 1 of 3). Yet, Court’s assertion of its jurisdiction was not
completely unqualified. Rather, it must be meet one of two conditions. The
first condition that it may meet, is that it must relate to Article 40 TEU on
the Court having the jurisdiction to determine the boundary between CFSP and non-CFSP
in its border-policing role. The second condition that the Court’s allows for
the assertion of its jurisdiction, is when it involves the legality of
restrictive measures against natural or legal persons.

The remark on Article 40
TEU is significant from the Court (paras. 60-63). From some corners, the
Court has been subject for some remarks for not properly utilising this Article
for elucidating what the precise boundaries for a CFSP and non-CFSP. To
date, it has shunned such possibilities provided to it to determine the fine
lines of this providing, underling the fact that CFSP is an obscure area of the
treaties, legally speaking. Rosneft perhaps elucidates some reasons
why Article 40 TEU has not been used by the Court to date, namely that it does
‘not make provision for any particular means by which such judicial monitoring
is to be carried out’ (para. 62). Thus, given this lack of guidance, the Court
finds itself falling back on Article 19 TEU to, ‘ensure that in the
interpretation and application of the Treaties the law is observed.’ (paras. 62
and 75).

It was advocated nearly a decade
ago that rule of law concerns could be used to provide justification for the
Court’s jurisdiction in CFSP cases upon a preliminary reference (De Baere
2008:186). Whilst this can be a common phrase with large recourse in a number
of situations to justify Court actions, the Court instead of utilising this
argument alone here (para. 72), went one-step further. alluded to the EU’s
Charter on Fundamental Rights (CFR), selected Article 47 CFR, the right to an
effective remedy and a fair trial, ensuring who has ‘rights and freedoms
guaranteed by the law of the Union…the right to an effective remedy’. (para.
73), as a basis for clarifying this position on its jurisdiction.

From the Court’s perspective in
CFSP-related cases, it certainly does not want the possibility for national
courts to test the possibility for them to attempt and try invalidate Union
legal acts in whatever form (paras. 78 and 79). It it long-standing
jurisprudence of the Court stemming from Foto-Frost (314/85), that it alone has the ability to
invalidate Union law, which the national courts cannot do. Thus, national
courts only have the possibility to invalidate implementing national measures
subject to their own constitutional requirements, and not the Union legal acts
themselves. The most recent example of the Court clarifying (ie.
extending) its jurisdiction into the CFSP arena was H v. Council (C-455/14
P). Unlike H v. Council however (Butler 2016:677 and on
this blog), in which the Court asserted jurisdiction, it then proceeded to
fling the substantive matter back to the General Court for adjudication. The
Court here in Rosneft had to proceed and answer the
substantive questions itself, which conclusively, upheld the sanctions in
question.

Analysis

The Court and the Opinion of
Advocate-General on its jurisdictional points can be commended for not allowing
a legal lacuna to be created by further disenfranchising CFSP as a particular
sub-set of Union law, and ensuring it was kept as close of the normal rules
surround preliminary references as possible. Such a situation, where
jurisdiction were not asserted, could have lead national courts to not send preliminary
references to the Court in further questions seeking clarification on points of
Union law. This potential chilling effect would most certainly hamper not just
the nature of sanctions, but also the coherent interpretation of Union law as a
whole, for which the Court is the ultimate adjudicator. By coming to the
conclusion that the Court did have the jurisdiction, empowering itself with the
ability to answer the substantive questions, AG Wathelet acknowledged he was
breaking with the view of his colleague, AG Kokott, from her view provided in Opinion 2/13 on the EU’s accession
to the ECHR. AG Wathelet said that without the Court having jurisdiction, it
would undermine under Articles in the Treaties, namely, Article 23 TEU, which
guarantees access to a Court and effective legal protection (para. 66), which
albeit by an alternative method, the Court broadly arrived at the same
conclusion.

Jurisdictional questions are not
just inconsequential matters in the exercise of EU foreign policy, but have
ramifications for EU procedural law, and the constitutional framework in which
Union law operates. The Court’s judgment, clarifying jurisdiction for itself,
when it was in doubt, further widens the potential for its scope for a role in
EU foreign policy. Hence, how broad a deference is there at the Court to
questions that ultimately hinge upon ‘sensitive’ areas of policy? Do
Member States want the Court to have jurisdiction in CFSP? The Treaties do
their best to prevent it, and five of the intervening six Member States and the
Council in Rosneft pleaded
that the Court did not have the ability to rule on the validity of CFSP acts.
Yet the Court is no stranger to such questions, as it has dealt with
jurisdictional questions on sensitive areas before, albeit in a slightly
different context. The Area of Freedom, Security, and Justice (‘AFSJ’ or
‘Justice and Home Affairs’)). The Gestoras (C-354/04
P) and Segi(C-355/04 P) cases
here provide us with suitable examples. In a pre-Lisbon context, the Court said
to interpret the cases as falling outside the scope of the then Article 35(1)
TEU because they were preliminary references would not be in ‘observance of the
law’. Thus, the Court ruled in both Gestoras and Segi that jurisdiction for the
Court in that field was permissible.

Given the Court’s judgment here
in Rosneft, there is no doubt
that it had to be slightly inventive to overall what was clearly a shortcoming
in the drafting of the Treaties. For the Court to have not asserted
jurisdiction in Rosneft would
have seemed contrary to the overall premise upon which the Union is a ‘complete
system of legal remedies’, which again it cited in Rosneft (para. 66), stemming from Les Verts (294/93). Do the Treaties allow vacuums to be
created where judicial review is excluded, or does it by reasonable means
provide for judicial review? The latter was not only an easy choice, but also
the more logical one. Article 19(1) TEU states that the Court, ‘ensure that in
the interpretation and application of the Treaties the law is observed’, and
that, ‘Member States shall provide remedies sufficient to ensure effective
legal protection in the fields covered by Union law.’

This, coupled with the Court’s
own ‘Declaration by the Court…on the occasion of the Judges’ Forum organised to
celebrate the 60th anniversary of the signing of the Treaties of Rome’ made the
day before the Rosneft judgment was published, commenced with
restating the premise that the EU is, ‘is a union governed by the rule of law’.
Yet such spirited measures are always dampened by other events, and it is
hardly in fitting with recent developments at the General Court. The NF and Others v. European Council cases,
and the Orders by the General Court on 28 February 2017 (T-192/16, T-193/16,
and T-257/16), stated that it did not have jurisdiction on the question of the
legal basis upon which an ‘EU-Turkey statement’ was reached. The likelihood is
therefore that such questions about the scope of the Court’s jurisdiction in non-CFSP
matters will rumble on.

Whilst this Rosneft judgment has clarified the
scope of the Court’s jurisdiction on preliminary reference cases dealing with
CFSP-related matters, one has to ask why the litigant did not instead seek to
go straight to the EU’s General Court with an action for annulment claim,
seeking the annulment of the sanctions applying Union-wide. The Court said that
the basis for actions for annulment through direct actions from the treaties do
not constitute the only means for which sanctions are challengeable (para. 70).
Thus, from this, we can deduce that Rosneft opens
the basis for future forum shopping when legal entities are subjected to the
Union’s comprehensive sanctions regime under the auspices of CFSP in the
future.

Remaining questions on the legal
limits of CFSP as a special area of area are yet to be fully answered in a
categorical way. One example of such is the doctrine of primacy, with lingering
questions on its applicability to CFSP. Even with this, jurisdictional
questions in CFSP remain. In a recent Order of the General Court in Jenkinson v. Council (T-602/15), it
found it did have the jurisdiction to deal with a staffing case stemming from a
CSDP, under the wing of CFSP. This demonstrates the caution of the General
Court on leading the way on jurisdictional matters, preferring to let the Court
of Justice lead the way.

Nonetheless, Rosneft clarifies that CFSP is one
(small) step towards wider integration with the rest of the EU legal order.
Former Judge at the Court, Federico Mancini said once in a speech at the Danish
Supreme Court (Højesteret) in Copenhagen that without the system of preliminary
references, that the ‘roof would collapse’ (Mancini and Keeling 1991:2).
Indeed, this week’s Rosneft judgment, ensuring that Article 267 TFEU
preliminary references in cases involving CFSP can be heard, upholds this
notion rather tightly.

Independently of whether such
development is politically prudent and/or feasible, one has to note that,
legally speaking, ‘Westminster has formally conceded
that Northern Ireland can secede from the United Kingdom to join a united
Ireland, if its people, and the people of the Irish Republic, voting
separately, agree to this.’ Section 1 of the
Northern Ireland Act 1998 is a rare example of a provision of a
constitutional statute that explicitly recognises the right of secession of a
region (see also the Good Friday Agreement). According to Schedule 1 of the Northern Ireland Act, however, such a
referendum can only be organised if ‘it appears likely to [the UK
Secretary of State] that a majority of those voting would express a wish that
Northern Ireland should cease to be part of the United Kingdom and form part of
a united Ireland.’ Theresa Villiers, the former
Northern Ireland Secretary has made clear that, according to her, ‘there
is nothing to indicate that there is majority support for a poll.’

However, Taoiseach
Enda Kenny has asked
recently for a special provision in any Brexit deal to allow Northern Ireland to
rejoin the EU should it be united with the Republic. He did so, notwithstanding
the fact that a special
deal for Northern Ireland is the declared goal of the UK government.

So, the question
is how could such a provision look like?

Obviously, there
are not many EU law provisions that regulate the (re)unification of (Member-)States.
The closest example is Article 4 of Protocol No 10 on Cyprus of the Act of
Accession 2003. Protocol No 10 provides the terms for the application of EU law
in Cyprus given that the island had not been unified at the moment it joined
the EU. In particular, it provides for the suspension of the application of the
acquis in northern Cyprus, a suspension which shall be lifted in the event of a
solution.

If such solution
occurs in the future, Article 4 provides for a simplified procedure that enables
the Union to accommodate the terms of the reunification plan. In particular,
Article 4 allows the EU, by a unanimous Council Decision at a future date and in
the event of reunification, to alter the terms of Cyprus’ EU accession that are
contained in the Act of Accession 2003. In other words, it allows the Council
to amend primary law (ie Act of Accession 2003) with a unanimous decision.

This might sound
like a heresy. However, the Treaties foresee special procedures for their
amendment in some cases. The best example, for the purposes of this post, is
the Council
decision on the basis of Article 2(2) of the 1994
Accession Treaty which adjusted the instruments of accession after Norway’s
failure to ratify. Several Articles of this Accession Treaty and of the Act of
Accession were amended by a Council decision while other provisions were
declared to have lapsed. Thus, in that case, the Council, itself, amended
primary law in a simplified procedure without any ratification of the Member
States.

To the extent that
the ‘Brexit’ Agreement will be considered as part of primary law, a similar
provision regulating the reunification of Ireland could be included and could
assist the smooth transitioning of Northern Ireland back to the EU. Of course,
the question of the reunification of Ireland –as many other questions related
to Brexit- is first and foremost political. It is important to point out,
however, that EU law is flexible enough to accommodate such political
developments.

Tuesday, 21 March 2017

Eleanor Spaventa, Director of the Durham European Law Institute and
Professor of European Law, Law School, Durham University

Ronan McCrea has already provided
a very thoughtful analysis
of the headscarf cases; this contribution seeks to complement that analysis by
focusing on two issues arising from the Achbita
case: first of all, the structural problems with the ruling of the Court, both
in terms of reasoning and for the lack of information provided; secondly, the more
general implications of the ruling for fundamental rights protections and the
notion of minimum harmonization in the EU context.

It might be recalled that in the Achbita case a Muslim woman was
dismissed from her employer for refusing to remove her headscarf, contrary to
the employer’s policy of neutrality, which included a ban on wearing religious
symbols. The case then centred on the interpretation of the framework
discrimination Directive
(2000/78) which prohibits, inter alia, discrimination on grounds of religion.
The Belgian and French Government (which had a direct interest because of the Bougnaoui
case) intervened in favour of the employee,
believing that the discrimination at issue was not justified (Achbitaopinion,
para 63). The Court, following the Opinion of AG Kokott, found that the rules
at issue might constitute indirect discrimination; that the employer’s aim to
allegedly maintain neutrality was a legitimate aim as it related to its freedom
to conduct a business as protected by Article 16 Charter. It then indicated
that the policy was proportionate, if applied with some caveats.

The reasoning of the Court – some structural deficiencies

The headscarf cases are of
fundamental importance to the European Union and to all of its citizens, not
only those who practice a non-dominant religion, and as such have been widely
reported even outside of the EU. One might have expected the Court to
engage with a more thorough analysis of the parties’ submissions and of the
issues at stake. Instead, we have two very short rulings with very little
detail. Just to give an important example – in both cases the French and the
Belgian governments sided with the claimants, hence drawing a very important
conceptual limit to the principle of laïcité which is justified, in this view,
because of the very nature of the State and its duty of neutrality, a duty
which cannot be extended to private parties (or if so only exceptionally). This
important distinction is not discussed in the ruling, not are the views of the
governments who would be directly affected by the rulings.

More importantly though, the fact
that the arguments of the parties are not recalled has also more general
consequences: as it has been noted by Bruno De Witte elsewhere,
the fact that no hermeneutic alternative is provided might give the impression
that no hermeneutic alternative is in fact possible, as if legal interpretation
is simply a matter of discovering the true hidden meaning of a written text.
This approach, not uncommon in civil law jurisdiction but more nuanced in
constitutional cases, hides the fact that, especially in cases of
constitutional significance, there is more than one legitimate interpretative
path that could be chosen, which also reflect different policy alternatives.
Interpretation then is also a choice between those different paths: a choice
which is, of course, constrained by the relevant legal system and one that
might be more or less persuasive. The failure
to acknowledge counter-arguments then results in rulings, like the ones here at
issue and many others in sensitive areas, which are not only potentially
unhelpful, but also close the door to more effective scrutiny of the reasons
that lead the Court to follow a given interpretation.

In the same vein, the analysis of
the discriminatory nature of these provisions is rather superficial. In
particular, there is no thought given to the fact that contractual clauses
allegedly protecting a principle of neutrality, might not only have a discriminatory
effect against certain individuals, but might have important inter-sectional
(or multiple) discriminatory effects. In other words, a rule banning religious
symbols might in fact also have a more pronounced effect on people from a
certain ethnic background or a certain gender. Equally disappointing, and in
this writer’s opinion legally flawed, is the approach taken in relation to the
finding of the potentially indirectly discriminatory effects of the rules at
issue. Here, the Court requires the national courts to determine whether the
‘apparently neutral obligation [(not to wear religious symbols)] (…) results in
fact in persons adhering to a particular religion or belief being put at a particular disadvantage.” (para 34,
emphasis added).

There are two issues to be noted
here: first of all, the Court remains silent as to what type of evidence of
indirect discrimination is required, and by whom. In discrimination cases,
burden of proof is crucial. This is recognised by the discrimination directives
at EU level, including Directive 2000/78 which provides that if the claimant
shows direct or indirect discrimination, then it is for the ‘respondent to
prove that there has been no breach of the principle of non-discrimination’
(Article 10(1)). One would have expected then the Court of Justice to instruct
the national court to require the defendants to discharge this duty with a
certain rigour, also by means of statistical analysis of the effect of such
policies on religious minorities. Yet, the Court does not even engage with this
question.

Secondly, and not less important,
the Court seems to imply that a rule that discriminates all religious people
would not be problematic. For instance if, say, Muslims and Orthodox Jews were equally
discriminated against, whilst non-religious persons were unaffected, then,
based on the dicta of the Court, there would be no discrimination. This
interpretation seems restrictive and not supported by the text of the directive
(or the Charter) that refers to discrimination on grounds of religion in general.
In any event, in discrimination cases it is crucial to identify the comparator,
and the Court fails to do so clearly and to support its choice with sound legal
arguments. But, beside these very important structural issues, the Achbita ruling raises other more
technical as well as general issues, as to the extent to which the Court’s
interpretation might affect the Member States’ discretion to provide more
extensive protection that that provided for in the Directive.

Minimum harmonization and fundamental rights

Directive 2000/78 is intended
only to set minimum standards, so that Member States can, if they so wish,
provide for a more extensive protection. Indeed many Member States have done so
by extending either the protected categories of people, or the field of
application of the legislation, or both. In theory then, the Achbita ruling should not be seen as the
last word in relation to the treatment of religious people at work. After all,
if Belgium or France or any other country finds the ruling problematic, it can
simply pass legislation prohibiting private employers from requiring religious
neutrality from its employees, unless of course a specific dress code is
necessary to ensure the health and safety of the worker or the public. Viewed
in this way, and notwithstanding the structural problems identified above, the
ruling seems very sensible: it is agnostic, in that it does not impose either
model on Member States, allowing therefore a degree of variation in a very
sensitive area, something which, as eloquently discussed in McCrea’s post,
might not be a bad thing. After all, this is the same path that has been taken
by the European Court of Human Rights.

However, things are slightly more
complicated in the European Union context. In particular there is nothing in
the ruling to indicate that the Directive sets only minimum standards so that
it would be open to those Member States to go further in protecting people
holding religious beliefs. And, more crucially, the Court, mirroring the
opinion of Advocate General Kokott, refers to the EU Charter of Fundamental
Rights when assessing the legitimacy of the justification put forward by the
employer. In particular, it finds that the business’s wish to ‘project an image
of neutrality (…) relates to the freedom to conduct a business that is recognised
in Article 16 of the Charter and is, in principle, legitimate’.

The reference to the Charter,
which indirectly frames the question as a clash of fundamental rights, is
important because, in the EU context, when the Charter applies it sets the fundamental
rights standard. In simpler terms this means that should a Member State wish to
provide more extensive protection to ensure that employees are not
discriminated on grounds of their religious belief, something that is allowed
under Directive 2000/78, it might be prevented from doing so since, pursuant to
the Achbita ruling, it would infringe
the right to conduct a business as protected by the Charter. In this way, far
from leaving the desired flexibility and discretion to the Member States, the
Court sets the standard – employers have a fundamental right, albeit with some limitations,
to limit the employees’ right not to be discriminated against. One might well
ask then, much as it has been remarked in relation to the Alemo
Herron case, what is the point of minimum harmonization directives if
the upward discretion of the Member States is so curtailed.

Conclusions

The Court of Justice did not have
an easy task in the Achbita case: it
was pretty much a ‘damned if you do, damned if you don’t’ scenario. For sure,
some of us would have liked the balance at issue to be tilted firmly in favour
of religious minorities, especially given the growing evidence of attacks and
discrimination against, particularly, Muslim women. The Court chose a different
path and that is, of course, within its prerogatives. However, the way that
path was trodden upon leaves many open questions both in relation to the way
the result was achieved, and to the many questions it overlooks. What is most
troubling is the implication that the freedom of Member States to provide
greater protection towards minorities may, in principle, be constrained by the
Court’s interpretation of the freedom to conduct a business.

Since the financial crisis began and the EU's response to it
included wider austerity in a number of countries, there have been doubts among
many citizens that the EU is still committed to prosperity and rising living
and working standards. The recently announced ‘European
Pillar of Social Rights’ is an attempt to address this concern. In our
view, the Pillar must include binding and high-profile pledges - on minimum
wage and minimum income - in order to address citizens' concerns and for the
EU to move on from austerity back to legitimacy.

The ‘European
Pillar of Social Rights’ is a Commission policy initiative launched in
March 2016. Our analysis reflects on the policy process and proposals to date.
It explains why a High-Level Conference on the Pillar held in late January 2017
is the most important staging-post to date. We make proposals for orienting the
Pillar initiative towards delivering dignity, autonomy and social justice in
the EU and evaluate the constitutional implications, especially in terms of EU
competence, of the commitments to introduce EU measures on minimum pay and
income, and to restrict the Pillar to the euro-area states. The Pillar
initiative seems likely to feed into the Commission White Paper on
the Future of Europe launched in March 2017 which will be followed by a series
of reflection papers of which the first mentioned is developing the social
dimension of Europe. Accordingly it is an important new policy juncture for
Social Europe which deserves analysis and input.

The Pillar is an open
process with impressive civil society and EU institutional participation.

The High Level Conference organised by the Commission on 23
January 2017 on the European Pillar of Social Rights showed it attracts as much
attention as it is mysterious. Numerous stakeholders alongside at least ten
Commissioners, including President Juncker and Vice-President Dombrovskis,
representatives of various EU institutions including President Tajani of the
European Parliament and government ministers converged on Brussels to voice
their opinions on the European Pillar of Social Rights.

The many interventions left little doubt that the precise
legal shape and policy content of the Juncker Pillar remains undetermined and
thus open for discussion. Hence, rather than reading the Pillar consultation
document with its draft list of ‘principles’ as a quasi-finalised text with
just its legal status and scope to be determined, the Pillar consultation is best seen as providing a vehicle for a wide
range of proposals on resetting Social Europe.

Seen as such a process, the Pillar consultation has been a
success. Over 16,000 individuals and organisations filled in the questionnaire
issued as part of the Consultation and around 200 written contributions were
submitted to the Commission. In Autumn 2016, national
consultation events were held across the EU Member States. The very
substantial NGO and union presence at the High-Level Consultation testifies to
civil society engagement and investment in the Pillar consultation. Amongst
these, the Social Policy Platform
deserves to be highlighted. By bringing together since 1995 over 30 different
social NGOs, including Age Platform Europe, PICUM (Platform for International
Cooperation on Undocumented Migrants), EAPN (European Anti-Poverty Network),
Housing Europe, ILGA-Europe, European Youth Forum and the European Disability
Forum, it had an added legitimacy and voice in the process. It disseminated
well-defined proposals for the Pillar. In light of Juncker’s announcement in
his closing speech, it produced the most resonant proposal of a minimum income directive and a proposal
on minimum pay via the European
Semester.

The frames of
discussion failed to give EU social rights and values their central place in the
Pillar.

The European Pillar of Social Rights initiative comes after
a decade which has altered perceptions of the EU as a benign or mildly positive
force for social justice in Europe.
Sovereign debt and EMU governance are one important reason for this
shift. Another relates to concerns triggered by free movement after the 2004
and 2007 enlargements. Political developments make it vital for the EU to use
the Pillar to reassert the pursuit of social justice as a central part of its
mission. Yet the urgency and importance of recentring the EU’s social justice
roles and responsibilities was not fully acknowledged by many actors at the
High-Level Consultation. There is a risk of doing too little.

Getting the frames of analysis right is crucial to guide the
Pillar and the decisions and actions on its implementation. The frames or
narratives which were very present during the High-Level Consultation were:

Social Europe was desirable
provided EMU debt and deficit limits were respected;

Social Europe, the EMU and the
internal market can or do happily co-exist;

Social Investment is the guiding
frame for the Pillar of Social Rights and is not incompatible with social
rights as human rights;

Adapting to new technologies and
work platforms is the main priority for Social Europe.

In our view, these frames should not be those guiding the
Pillar process or its implementation. Instead it is vital to make it explicit that the driving force for
legal and policy change is the desire to protect the dignity and autonomy of
individuals as well as social justice.

Dignity recognises the equal and intrinsic worth of every
human being while autonomy requires political institutions not to deprive
individuals of valuable options in areas of fundamental importance in their
lives. In the absence of such an explicit message in the Pillar, or if the
message is blurred by economic arguments in support for change, or made subject
to economic conditions, or wishing away hard choices between the economic and
the social, or attributing Social Europe’s malaise to new technologies and
platforms, the message and its delivery will be imperilled.

Protection of individuals and their dignity and autonomy has
a firm EU law basis bolstered by national constitutional and international
human rights law. Dignity is the foundational principle of the EU Charter of
Fundamental Rights and many of the rights it contains are specifications of
those foundational commitments. Hence ,for example, the Charter ‘recognises and
respects the right to social and housing assistance so as to ensure a decent
existence for all those who lack sufficient resources’ (Article 34(3)) and ‘the
right to working conditions which respect his or her health, safety and dignity’
(Article 31). Most closely related to the value of autonomy in Social Europe
are the EU Charter commitments to the right to engage in work and pursue a
freely chosen occupation as well as the freedoms of association (Article 15),
expression, information and consultation (Articles 11 and 27), to collectively
bargain and take collective action (Article 28).

Beyond the EU Charter and human and constitutional rights’
commitments, the EU’s social justice and progress objectives feature prominently
in the Treaties: in the TFEU’s preamble as the resolve to ensure the ‘social
progress of their States by common action to eliminate the barriers which
divide Europe’. Article 3 TEU conceptualises the EU as ‘a social market
economy’ aiming at full employment and social progress, and provides that it
‘shall combat social exclusion and discrimination, and shall promote social
justice and protection’. These objectives shall furthermore be mainstreamed
across all EU policies, in accordance with Article 9 TFEU, which provides that
‘in defining and implementing its policies and activities, the Union shall take
into account requirements linked to the promotion of a high level of
employment, the guarantee of adequate social protection, the fight against
social exclusion’.

A European Pillar of Social
Rights must be founded on these values and be concerned with their
promotion and guarantee in a changed EU membership and EMU context.

The EU constitutional
implications of a Eurozone pillar and minimum income and pay guarantees

The Commission President made a twofold announcement: an
initial focus of the Pillar on the Eurozone and a dual guarantee for minimum
pay and income.

We strongly endorse the proposals to focus on minimum pay
and income for those living and working in Europe. These proposals not only
address the preoccupation that the EU has threatened these protection floors,
they also enshrine the values of dignity and autonomy in the EU. Yet to
properly realise those values requires minimum pay and income instruments to apply to all EU Member States, not
simply Euro area states. Sovereign debt arrangements applied to three
non-euro area states and concerns that enlargement threatens the social floor
are not confined to euro area states either. Minimum pay and minimum income are
social guarantees of a fundamental nature that should apply across the EU.
Indeed the social acquis, other than the brief opt-out by the UK between Maastricht
and Amsterdam, has always applied to all those living and working in Europe and
should continue to do so.

Moreover, to make them tangible, these EU minimum income and
pay guarantees must be enshrined in visible and effective instruments. In both
cases, our preference would be for legally
binding Directives which should be complemented with soft law commitments
in the European Semester and programme commitments in sovereign debt loan
states.

This raises questions of EU competence to adopt such legally
binding measures.

For minimum income, we agree with the Social Policy Platform
that Article 153(1)(h) TFEU which
allows for binding measures to be adopted using the ordinary legislative
procedure for the integration of persons excluded from the labour market is
appropriate.

It is widely assumed that it is impossible for the EU to
adopt a minimum pay directive because Article
153(5) TFEU states that the social policy legal base ‘shall not apply to
pay’. However, the Commission may have in mind a creative literal reading of
the combination between Article 153(5) and Article 352 TFEU (the ‘residual
powers’ clause of the Treaties). Article 153(5) TFEU could be read as excluding
only the adoption of a minimum pay directive under the Social Policy Title of
the Treaty without excluding other possible legal bases.

Article 352 TFEU would
then be examined as a potential legal basis for a minimum pay directive. Article
352 can be used ‘where the Treaties have not provided the necessary powers’ but
cannot be used to harmonise Member States’ laws or regulations ‘where the
Treaties exclude such harmonisation’. However, this harmonisation exclusion could
be read as applying only in those cases where the Treaties clearly in terms
outlaws harmonisation such as in the areas of vocational training (Article 166
TFEU) and culture (Article 167 TFEU) (each allowing legislative measures to be
adopted ‘excluding any harmonisation of the laws and regulations of the Member
States’). It therefore would not apply to Article 153(5) TFEU. Following this
interpretation, a minimum pay directive could be adopted if it achieved the
unanimous Member State support required under Article 352 TFEU. It remains to
be seen if such a line of reasoning would be accepted by the EU legislator.

The question could be raised whether the internal market
legal basis of Article 115 TFEU
could be used for the adoption of a minimum pay directive (Article 114 TFEU
cannot be used, since Article 114(2) TFEU prevents reliance on Article 114(1)
to protect the rights and interests of employed persons). There is an argument
that such a measure, even if it would retain certain differences in minimum pay
levels among EU Member States, would help reduce distortions in competition.
Not only would it facilitate the application of the Posting of Workers Directive
in the area of cross-border service provision, having a certain minimum pay
level in all Member States could more generally help limit competition on
wages. Whether the expected reduction in distorted competition would be
sufficient to fulfil the conditions for use of the internal market legal basis
is an open question, and would depend in part on at what (relative) level the
wage would be set and whether this significantly decreases current differences
in pay among the Member States.

However, even if this would be accepted as possible in legal
terms, there are several reasons why Article 115 TFEU would not be the
advisable course of action. If the directive is about achieving genuinely
social objectives, the use of an internal market legal basis is unwise, as the
Court is then more likely to interpret the measure in a market-friendly way in
case of a conflict between ‘the social’ and ‘the market’ (which is arguably
what happened in the case of the Posting of Workers Directive, as well as the Collective
Redundancies Directive). And as
Article 115 TFEU requires unanimity as much as Article 352 TFEU, there is
little strategic advantage in using it either.

Subsidiarity concerns will evidently be addressed by setting
pay and income levels appropriate to each state. EU respect for the Council of
Europe and commitment to social rights can be underlined by using that body’s European Social
Charter commitments and elaboration of the right to a fair remuneration
(Article 4(1)) and to social assistance (Article 13) as base-lines.

The former provision requires States ‘to recognise the right
of workers to a remuneration such as will give them a decent standard of
living’, and the European Committee of Social Rights has ruled that the lowest
net wage must be above a minimum threshold, set at 50% of the net average wage,
while state conformity will be assumed above 60% of the net average wage. The
latter provision deems assistance appropriate where the monthly amount paid to
a person living alone is not manifestly below the poverty threshold (50% of
median equivalised income as established by Eurostat).

If it is decided necessary for transitional or political
reasons to proceed with the nineteen
euro area states or some other subset of EU Member States, this opens a
further set of questions about the legal basis of measures for minimum pay and
income as the legal bases indicated are for all Member States. Although the
Lisbon Treaty added a new legal basis, Article
136 TFEU, for measures addressed only to euro area states, we do not
consider this a suitable basis for minimum income and pay legislative proposals
for two reasons. The first is that, although used (questionably) to create
measures providing for EMU sanctions for euro area states (see C. Kilpatrick, ‘The
New Economic Component of EMU: A Lawful and Effective Design?’ EUI Working
Paper, ADEMU Horizon 2020 Project Series, 2016), its centre of gravity lies in
strengthening coordination and surveillance under the European Semester. The
second is that legislative proposals for minimum pay and income, based on
dignity, autonomy and social justice, should not be grounded in a macro-
economic competence.

What then are the alternatives for legislative measures on
minimum pay and income covering only some EU Member States? One possibility is enhanced co-operation, a process
whereby some Member States adopt EU law without unwilling Member States (see Article
20 TEU and Articles 326-334 TFEU). This can be used only as a last resort where
the Council has established that the objective sought cannot be achieved within
a reasonable period by the EU as a whole and hence could provide an alternative
avenue for minimum income and pay proposals should EU-wide agreement prove
unattainable.

Another possibility is ‘going
outside’ the Treaties via an international agreement on these matters
between only the participating euro area states or those states and other
willing participants. The former was the model used in the sovereign debt
crisis to set up the European Stability Mechanism in 2012 and its predecessor,
the European Financial Stability Fund in 2010. The latter was the path chosen
for the Fiscal Compact Treaty of 2012. However, such parallel integration
however raises important legitimacy concerns: see S. Garben, ‘Restating the
Problem of Competence Creep, Tackling Harmonization by Stealth and Reinstating
the Legislator’, in: S. Garben and I. Govaere (eds.), The Division of Competences in the EU Legal Order: Reflections on the
Past, the Present and the Future (2017, Hart Publishing).

This is not to deny Mr Juncker’s welcome recognition that
the constraints imposed in the context of EU macro-economic governance justify
special attention to socializing the European Semester. It is also certainly
the case that EU legislative commitments can usefully be complemented by action
in the European Semester. We make proposals to do so in the next section.

Beyond the Juncker
announcement: the Pillar needs to strengthen, broaden the social acquis and
socialize the European Semester

At the time of the 60th anniversary of the Treaty of Rome,
it may be recalled that the TFEU enables
the adoption of EU legislation on a fairly broad set of social questions. For
instance, Article 153 TFEU allows for the adoption of legislation on workers’
health and safety, working conditions or information and consultation of
workers. A whole body of social legislation has been adopted at EU level and
begs for modernisation. As mentioned in this note already, the Charter of Fundamental Rights of the
European Union - that has the same legal value as EU primary law since the
entry into force of the Lisbon Treaty - also contains a set of provisions on
solidarity that have so far been little used.

Curiously, the ability for the EU to intervene through
legally binding instruments had been subject to little attention during the
High Level Conference. One could hence fear that the Commission will shy away from making hard law proposals. We
would thus like to underline the importance of anchoring the Pillar in EU
social policy and giving expression to the social provisions contained in the
Charter. This is necessary to ensure that the Pillar indeed enhances the
protection of the dignity and autonomy of individuals across Europe.

We have already made suggestions elsewhere to broaden and consolidate
the EU social acquis (see S. Garben, C. Kilpatrick and E. Muir, Towards a
European Pillar of Social Rights: Upgrading the Social Acquis, College
of Europe Policy Brief #1.17). We suggested the adoption of (1) a Directive for
the Protection of Dependent Workers, ensuring the application of the existing
EU social and labour law measures to all dependent workers (2) a Protection
against Precarious Work Directive, (3) a Directive for the Enforcement of
Workers’ Rights. We also called for (4)
a Declaration safeguarding the integrity of the social acquis as an EU floor
for worker protection.

A further re-centring of EU competences in the social field
could lead to the re-adoption of Directives such as the Collective Redundancies Directive and the Directive
on the Transfer of Undertakings on social
legal bases. Indeed, these Directives remain abnormally grounded in EU
internal market competences. It would be naïve to ignore the possibility of
tensions between the economic and the social dimensions of these instruments,
as illustrated by the recent AGET case before the CJEU (freedom
of establishment v. domestic rules protecting against collective redundancies).
The social nature of these legislative instruments ought thus to be
consolidated. The assertion of such an autonomous mandate for social rights
would allow to better articulate economic and social concerns in cases of
tensions.

In the meanwhile, existing tools of economic governance
could be re-adjusted to make more space for genuine social priorities. In that
sense, the social platform wisely
suggested to use the infrastructures
of the European Semester to counter the current trend pushing Member States
to readjust wages downwards. The Commission could indeed support the
introduction of references to adequate minimum wages in the Annual Growth
Survey as well as in the Country Specific Recommendations and keep track of the
development of wage levels. This would give more bite to the employment policy
prong of the European Semester.

To that effect, it is important that Country Specific Recommendations continue to be adopted on the dual
legal bases of Articles 121(2) (economic policy) and 148(4) TFUE (employment
policy). Key players at European level are thus not only those in charge of
economic and financial affairs but also those responsible for employment and
social policy who are more likely to ensure that due attention is paid to employment
and social concerns indeed. Mark Dawson has usefully observed that the
involvement of the latest category of actors could be further enhanced in the Macroeconomic Imbalance Procedure (MIP;
see M. Dawson, ‘The European Semester: Displacing Social Policy in the New ‘New
Governance’’ in C. Kilpatrick (ed.) The
Displacement of Social Europe (forthcoming). On file with the author).

Indeed, to the extent that this procedure does result in
suggesting - if not imposing – changes in domestic social and employment
policies as part of the Country Specific Recommendations, the decision-making process
leading to their adoption shall be adjusted. This should allow for a stronger involvement of actors
specialised in the field such as the Council configuration on Employment,
Social Policy, Health and Consumer Affairs. For instance, see the Report
from the Council Employment Committee and Social Protection Committee on ‘Assessment
of the 2016 Country-specific Recommendations (CSRs) and the implementation of
the 2015 CSRs’ on labour market aspects (p 10) and on social protection and
inclusion (p 21).

Now, the Juncker Commission may be considering reserving, or
enhancing, the emphasis on minimum pay (and income) in recommendations specific to Euro area members. Although we would
regret a focus on Eurozone members only, if this approach was adopted it would
be all the more so important to refer to Article 148 TFEU (employment policy)
as a legal base besides Articles 136 (Eurozone) and 121(2) TFEU (economic
policy) in order to ensure adequate
representation of social players and interests.

Conclusion

The most concrete elements of information received during
the Conference are unquestionably the announcements made by Commission
President Juncker. Let us be clear, sending a message that the EU guarantees
(directly or indirectly) minimum income and wages would be most welcome; and
giving flesh to such guarantees through
tools available in the context of EU economic governance is understandable.
This however should be framed with appropriate conceptual and legal tools placing
individual protection at the core of the process and, to that effect, it ought
to be backed up with a solid effort to
modernise the EU social acquis.

In that sense, it is to be hoped – as hinted at by President Juncker
himself - that the initiative for the European Pillar of Social Rights will
live up to the standards of the
ambitious social agenda called
for by Commission President Delors in the late 1990s. It may be
recalled that this had resulted in the Proclamation by 11 out of the 12 Member
states of the Community Charter of Fundamental Social Rights and came with a
strong impulse for the adoption of new legislation (point 28 of that Charter).
In the new EMU and enlargement context, the legislative focus should be on providing
an updated and more comprehensive EU floor of social rights and should be
accompanied by proposals to socialise the European Semester both in its process
and its substance.